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Bankrupt law firm Dewey & LeBoeuf's plan to pay bonuses to its remaining employees has drawn objections from U.S. Trustee Tracy Hope Davis, who said that the plan might not be cost effective, Reuters reported yesterday. Davis said in court papers that the proposed plan did not provide enough information to determine if the cost of retaining employees was economically feasible. The law firm is seeking approval from the U.S. Bankruptcy Court in Manhattan to pay $450,000 to its 52 remaining employees who collect money and bill former clients. The trustee also said the plan could not be justified because the firm is no longer operating as a normal business.

General Motors has made pension buyout offers to about 42,000 of its 118,000 former white-collar employees and surviving spouses, the New York Times reported today. GM said that the change would eliminate $26 billion of its $134 billion in worldwide pension obligations. The automaker's global pension plan is underfunded by about $25 billion. The Ford Motor Company said it would make its own buyout offer to its 98,000 retired salaried workers later this summer. And GM has said that it might discuss pension buyouts for its 400,000 hourly retirees and surviving spouses with their union, the United Automobile Workers.

The parent company of bankrupt American Airlines has sought court permission to reduce retiree health benefits and add out-of-pocket costs for access to certain coverage, Reuters reported on Friday. AMR Corp. said that it would discontinue retiree life insurance and would end medical coverage for those over 65. That group would, instead, have access to a Medicare supplement at their own cost. Retirees under 65 would still have access to company plans, but at their own expense as well, according to the company. AMR asked a bankruptcy judge to declare that it has the right to alter company-funded retiree benefits because they were never vested. American's retiree health plans cover more than 40,000 people.

GM and rival Ford Motor, rebounding from their near-death experiences during the financial crisis, are eager to rid their balance sheets of the huge pension obligations that Wall Street views as onerous debts weighing on their credit ratings and stock prices, Bloomberg News reported yesterday. So this spring they came up with an ambitious solution: buy out the lifetime pension payments due 140,000 salaried retirees. With both carmakers suddenly flush with profits—GM and Ford made $9.2 billion and $20.2 billion, respectively, in 2011—it seems like a smart way to remove decades of uncertainty from their finances. Yet because the buyouts are based on actuarial assumptions about what each retiree’s pension stream is worth using IRS projections about inflation, many ex-employees worry they may outlive their payments. GM says its $134 billion pension obligation is the largest of any company worldwide and was underfunded by $25.4 billion at the end of 2011. Ford’s $74 billion pension liability was underfunded by $15.4 billion at the end of last year.

ABI's Commission to Study the Reform of Chapter 11 has released the names of nearly 130 corporate restructuring experts who have agreed to serve on one of 13 advisory committees to examine discrete current issues. The diverse group of professionals come from the backgrounds of law, finance and the judiciary. The lists of names can be found on the Commission's website. The thirteen advisory committees/study topics are: Administrative Claims, Critical Vendors and Other Pressures on Liquidity; Avoiding Powers; Bankruptcy Remote Entities, Bankruptcy-Proofing and Public Policy; Distributional Issues Under Plans; Executory Contracts and Leases; Financial Contracts, Derivatives and Safe Harbors; Financing Chapter 11; Governance and Supervision of Chapter 11 Cases and Companies; Labor and Benefits Issues; Multiple Enterprise Cases/Issues; Plan Issues: Procedure and Structure; Role of Valuation in Chapter 11 Cases; and Sales of Substantially all of the Debtor’s Assets, Including Going Concern Sales. The Commission is working to break down each study topic further into subtopics—a process intended to help advisory committees identify all potentially relevant issues and coordinate areas of potential overlap among study topics.

The Commission has announced a schedule of fall public hearings at major insolvency conferences, where interested members of the restructuring community can appear and provide testimony to the Commission or to one or more of the advisory committees. The hearings will be held at the NCBJ annual meeting on October 26, the TMA annual convention on November 3 and the Commercial Finance Association annual meeting on November 15. Other public hearing dates will be announced.

AMR Corp.'s American Airlines won court approval for new labor agreements with five groups represented by the Transport Workers Union as the airline works to reach deals with pilots and flight attendants, Bloomberg News reported yesterday. Bankruptcy Judge Sean Lane said at a court hearing today that American, which is seeking to cut labor costs as part of its restructuring, can enter into the new agreements. The approval comes as pilots at American are set to vote on new contract terms with the airline. Flight attendants and two other TWU groups that have not reached agreements with the carrier are planning to resume talks.

Cities, states and the millions of Americans who work for them will soon face new accounting rules that will require many local governments to disclose pension obligations that were hidden until now, stepping up the pressure to rein in public workers' benefits, the New York Times reported today. The new rules are the result of more than five years of work by the Governmental Accounting Standards Board on one of the most contentious topics the agency has ever tackled. The current rules have been criticized for making pensions look more affordable than they really are and creating incentives for governments to take undue risks with taxpayer money. The controversy centers on the way governments measure their future payments to retirees in today's dollars, a common financial calculation known as discounting. The accounting board has devised a method that will require severely depleted pension funds to factor in the likelihood that they will run out of money at some point, and have to borrow to pay retirees their benefits. Healthier plans will be allowed to discount future payments as they do now.

A judge on Thursday postponed a ruling on whether to throw out contracts covering thousands of unionized workers at bankrupt American Airlines, giving labor and management an extra week to try and reach deals to save the company money, Reuters reported yesterday. Judge Sean Lane was set to rule on Friday on the airline's motion to abrogate terms covering pilots, flight attendants and certain ground workers. American said Lane postponed his decision until June 29, averting for now the possibility of management imposing work rules and other terms until long-term deals could be cut. American sought bankruptcy in November, partly blaming high union labor costs for losing its competitive edge vs. rivals who restructured in court several years ago and then strengthened themselves further through mergers. The case is In re AMR Corp et al., U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

Unsecured creditors of bankrupt RG Steel are seeking to slow the company's rushed sale process, which they said will lead to a paltry price and a higher likelihood that the company's mills will close, Reuters reported yesterday. The unsecured creditors' committee, which includes the United Steelworkers, suppliers and the Pension Benefit Guaranty Corp., said that the July 27 sale deadline was likely to result in the company's assets being surrendered to the existing owner. That could happen because the current owner, Renco Group, has said it is also a secured lender, which the unsecured creditors dispute. RG Steel has said the sale schedule was mandated by its lenders.

American Airlines and the union for its mechanics ended two days of negotiations without a deal on labor cost-cutting, making it likely that the decision will be left to the judge handling American's bankruptcy case, the Associated Press reported yesterday. The airline also resumed talks yesterday with its pilots, and while the pilots' union reported progress in talks, no agreement has been reached. Negotiations with flight attendants broke off two weeks ago.